Government crisis linked to falling prices at the gas pump

Heather Gilbert of Ocala puts gas in her sport utility vehicle at the B.P. Gas Station on South Pine Avenue in Ocala, Fla. on Monday, Oct. 7, 2013. Gas prices have been falling recently and the price of regular unleaded was 3.259 at the B.P. Station on Monday.

Published: Monday, October 7, 2013 at 4:45 p.m.

Last Modified: Monday, October 7, 2013 at 4:45 p.m.

Gas prices in Florida are at their lowest average so far in 2013 and an oil analyst attributes the drop to a depressed economic outlook over the government shutdown, combined with normal seasonal trends.

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AAA's Daily Fuel Gauge Report put Florida's average price just below $3.30 per gallon on Monday morning. According to Jessica Brady, an oil analyst with AAA, the average price in the state hasn't been as low as $3.30 since Dec. 26.

Meanwhile, the crowdsourcing website, GasBuddy.com, indicated the average price for regular for the Ocala metro area was $3.277 per gallon Monday morning, down from $3.318 the week before, from $3.519 one month ago and from $3.629 a year ago. The site lists the current U.S. average at $3.380.

Brady said gas prices typically decline at this time of year for two reasons: drop in demand for fuel after summer ends and schools reopen; and a switch to a cheaper gas blend that takes off some 10 to 15 cents at the pump.

The difference now, according to Brady, is the government crisis, which she called "very bearish for the market right now."

"Looking out over the next few weeks, unless the government gets back up and operating and things really turn around, I think we're going to see prices continue to drop," Brady said Monday morning.

"In the Tampa Bay area, there are already some gas stations posting prices at $2.99 to $3 a gallon," she said. "And Tampa's average is $3.18 right now. If prices continue to go down, we could see more stations hit that $3 or less-than price range, but I don't know that we would see the state or metro average hit $3 or less."

Gas prices plummeting further? What's not to like, right?

Plenty, if an economic catastrophe accompanies the drop, Brady said.

"Depending on how long this continues, it could really affect consumer spending in the future for the holidays," she said. "It can affect consumer travel and demand for fuel."

Brady said prices on Monday morning might have been even cheaper had not Tropical Storm Karen threatened refining operations in the Gulf of Mexico, though that threat has passed.

Cheaper gas is good news for Ernesto Pozo, owner of Shuttleliner of Ocala, whose airport shuttle business takes customers to and from Orlando four or five times a day and services Gainesville and Tampa customers on a private, charter basis.

"Any five cents or 10 cents that the gas goes down, that means money for the company's bottom line," Pozo said. "In order to survive in this economy, you need to have that."

On the other hand, Pozo said he is concerned about the effect of the government shutdown on the economy.

"Nobody knows what's going to happen," he said. "If the government's not working, we'll definitely get impacted some way or other."

Meanwhile, lower prices at the pump can put the squeeze on owners and operators of gas stations.

Aisha Islam, store manager of the BP at 1702 S. Pine Ave. in Ocala, said price drops test the loyalty of customers her business works hard to build.

"You have a lot of hesitancy because you have some customers who wonder if they should buy now or wait and see if the price keeps going down," she said. "They'll go somewhere else if they see it's two cents cheaper."

In the meantime, Islam said, stations often take on losses by offering specials designed to woo customers, noting a reduced price her store is offering for a premium car wash.

"Our expenses stay the same whether our prices go up or down," she said. "Our electricity bill is $4,000 a month."

Meanwhile, Joanne Birchfield of Ocala, a customer at Islam's BP station, said she was pleased with the current going rate on Monday afternoon.

"I like to see it at this price," said Birchfield, as she filled her Chrysler Pacifica. "If only it would stay that way."

On the theoretical link between the price drop and the crisis in Washington, Birchfield said "That's the gimmick — the government."

<p>Gas prices in Florida are at their lowest average so far in 2013 and an oil analyst attributes the drop to a depressed economic outlook over the government shutdown, combined with normal seasonal trends.</p><p>AAA's Daily Fuel Gauge Report put Florida's average price just below $3.30 per gallon on Monday morning. According to Jessica Brady, an oil analyst with AAA, the average price in the state hasn't been as low as $3.30 since Dec. 26.</p><p>Meanwhile, the crowdsourcing website, GasBuddy.com, indicated the average price for regular for the Ocala metro area was $3.277 per gallon Monday morning, down from $3.318 the week before, from $3.519 one month ago and from $3.629 a year ago. The site lists the current U.S. average at $3.380.</p><p>Brady said gas prices typically decline at this time of year for two reasons: drop in demand for fuel after summer ends and schools reopen; and a switch to a cheaper gas blend that takes off some 10 to 15 cents at the pump.</p><p>That fuel blend doesn't contain costly additives aimed at reducing emissions in the high-traffic months.</p><p>The difference now, according to Brady, is the government crisis, which she called "very bearish for the market right now."</p><p>"Looking out over the next few weeks, unless the government gets back up and operating and things really turn around, I think we're going to see prices continue to drop," Brady said Monday morning.</p><p>"In the Tampa Bay area, there are already some gas stations posting prices at $2.99 to $3 a gallon," she said. "And Tampa's average is $3.18 right now. If prices continue to go down, we could see more stations hit that $3 or less-than price range, but I don't know that we would see the state or metro average hit $3 or less."</p><p>Gas prices plummeting further? What's not to like, right?</p><p>Plenty, if an economic catastrophe accompanies the drop, Brady said.</p><p>"Depending on how long this continues, it could really affect consumer spending in the future for the holidays," she said. "It can affect consumer travel and demand for fuel."</p><p>Brady said prices on Monday morning might have been even cheaper had not Tropical Storm Karen threatened refining operations in the Gulf of Mexico, though that threat has passed.</p><p>Cheaper gas is good news for Ernesto Pozo, owner of Shuttleliner of Ocala, whose airport shuttle business takes customers to and from Orlando four or five times a day and services Gainesville and Tampa customers on a private, charter basis.</p><p>"Any five cents or 10 cents that the gas goes down, that means money for the company's bottom line," Pozo said. "In order to survive in this economy, you need to have that."</p><p>On the other hand, Pozo said he is concerned about the effect of the government shutdown on the economy.</p><p>"Nobody knows what's going to happen," he said. "If the government's not working, we'll definitely get impacted some way or other."</p><p>Meanwhile, lower prices at the pump can put the squeeze on owners and operators of gas stations.</p><p>Aisha Islam, store manager of the BP at 1702 S. Pine Ave. in Ocala, said price drops test the loyalty of customers her business works hard to build.</p><p>"You have a lot of hesitancy because you have some customers who wonder if they should buy now or wait and see if the price keeps going down," she said. "They'll go somewhere else if they see it's two cents cheaper."</p><p>In the meantime, Islam said, stations often take on losses by offering specials designed to woo customers, noting a reduced price her store is offering for a premium car wash.</p><p>"Our expenses stay the same whether our prices go up or down," she said. "Our electricity bill is $4,000 a month."</p><p>Meanwhile, Joanne Birchfield of Ocala, a customer at Islam's BP station, said she was pleased with the current going rate on Monday afternoon.</p><p>"I like to see it at this price," said Birchfield, as she filled her Chrysler Pacifica. "If only it would stay that way."</p><p>On the theoretical link between the price drop and the crisis in Washington, Birchfield said "That's the gimmick — the government."</p>